Israel’s hotel industry is on pace for a record-breaking year with average daily rate (ADR) as the main driver of performance, according to data from STR.

Through the first 10 months of 2018, Israel posted an ADR of ILS806.28, which was a 7.8% increase when compared with the same 10 months in 2017. Additionally, that absolute ADR level was the highest for any October year-to-date time period in STR’s Israel database.

“Solid growth in demand that began in 2016 has given hoteliers in the country the confidence to push room rates—even as the presence of the sharing economy continues to broaden,” said Thomas Emanuel, STR’s director of business development. “Occupancy comparisons have been fairly flat thus far in 2018, but ADR increases continue to drive positive year-over-year developments in RevPAR. Over the past two years, both occupancy and ADR have been maintained at roughly 10% above the previous performance peak in the country. All of this points to a healthy marketplace overall.”

Israel’s occupancy was 70.1% through October (-0.4% year over year), while revenue per available room (RevPAR) was ILS565.26 (+7.4% year over year). The absolute occupancy level was the second-highest for the October year-to-date time period, while the RevPAR level was the highest.

At the market and submarket levels, Jerusalem has been the top performer in terms of growth. Through the first 10 months of 2018, the market’s occupancy was up 5.3%, and ADR increased 12.9%. As a result, RevPAR jumped 18.9%.

“Jerusalem and Tel Aviv are the two cities outperforming the national average, but as another indicator of the health of the country’s hotel industry, we are also seeing growth across Haifa, Eliat and the Dead Sea,” Emanuel said.

Research conducted by STR’s Tourism Consumer Insights team found that Jerusalem is the most popular among the country’s destinations. From 482 traveler panel responses, 7% have already visited the country, while 63% have heard of or are interested in visiting the country. Israel’s historic attractions are popular among potential visitors, while the perception of conflict and geopolitical instability is a primary concern.